With inland gas reserves said to be enough to meet the UK’s needs for 25 years, even the most picturesque of places are being eyed up by prospectors

Compton Martin is not the most obvious place to have a conversation about drilling for gas, and what’s already happening in US states such as Texas, Oklahoma and Ohio. It sits on the northern edge of the Mendip Hills, in the famously picturesque Chew Valley. It may say something about the place that it still has a functioning village water pump.

At a bus stop, I meet two local mums: Chloe Mann, 35, and Sarah Kirwan, 39. “It’s quiet little village,” says Mann, a mother of two who works part-time at a law firm. “It feels like a lovely little enclave of the countryside. We always feel like it’s Hobbitshire – a green valley where nothing happens.”

But something big may be about to. Since 2008, in partnership with an Australian firm called Eden Energy, a Welsh company named UK Methane has owned Petroleum Exploration and Development Licenses that cover large swathes of countryside south of Bristol, some of which sits on top of the old North Somerset coalfield. In March this year, the firm’s director, one Gerwyn Williams, publicly announced that he was interested in test-drilling for gas in Compton Martin, and the nearby village of Ston Easton.

If successful, this could be followed by the extraction of coalbed methane, a controversial practice related to “fracking”, the notorious business of producing gas via hydraulic fracturing of shale deposits. In fact, coalbed methane extraction can itself involve fracking techniques – and in any case, if sufficient gas is discovered, the fracking of local shale could eventually follow.

Both possibilities are the focus of noisy hostility, here and elsewhere. Despite official reassurances about its safety, shale-fracking has been linked to earthquakes, water contaminated with pollutants such as arsenic and lead, noise pollution, and more. For similar reasons, coalbed methane extraction is maligned by eco-activists as its “evil twin”. Possible evidence for such claims is not hard to find: as I discover when I pitch up at a local meeting organised by a group called Frack Free Somerset, many campaigners point to the increasingly renowned case of Tara in south-west Queensland, Australia, where residents have reported no end of worrying phenomena since coalbed methane extraction began there. Not just gas leaking into local rivers, but an array of health problems from headaches and nosebleeds to skin rashes.

The conversations I have with people here suggest a weird mixture of The Archers and Dallas. “This is an area of outstanding natural beauty, so I can’t see how they’re getting away with it,” says Compton Martin’s sub-postmaster, Ray Stewart, who runs a post office that is almost surreally tiny. He then sounds a note of ambivalence. “But we need energy, do we not? We all use it.”

I bump into Kim Russell, 55, about 50 yards away, who is climbing on to a fearsome-looking motorcycle. “I don’t agree with it,” he tells me. “The amount of pollution fracking creates, and the stories you read about water suddenly catching fire and all that. And anyway, the community won’t benefit.”

Fracking has become a media byword for all this, but “unconventional gas” actually encompasses three processes. Fracking itself uses a technique whereby deep wells are drilled into underground shale deposits, and pumped with water, laced with sand and chemical agents – which fractures the rocks, and releases natural gas (along with lots of contaminated H20, often in the form of a residual sludge).

Coalbed methane extraction is a related method, which is actually at a more advanced stage in the UK. It involves the drilling of wells into coal seams followed by the pumping out of water, which results in gas being released by the coal, and being brought to the surface. Lastly, there is the so-called underground coal gasification now proposed for – among other places – an area beneath Swansea Bay in west Wales, which involves the partial burning of subterranean coal deposits.

All three are part of a huge, ongoing story. After the infamous events of April and May and 2011, when two earth tremors in the Blackpool area were blamed on test fracking and operations were stopped, the most high-profile unconventional gas project is once again focused on the Bowland basin in Lancashire, where the energy firm Cuadrilla aims to frack for shale gas, and has just sold a 25% stake in its operations to the gas conglomerate Centrica, formerly British Gas, for £40m.

In the commuter-belt village of Balcombe in West Sussex, Cuadrilla is set to begin test-drilling for shale oil and gas. Small-scale production of coalbed methane is already happening near Warrington in Cheshire, where a pilot project is also using gas to generate electricity. The Australian firm Dart Energy has applied for planning permission for 14 coalbed methane wells and a network of pipelines near Falkirk, and is prospecting elsewhere in Scotland. Whole swathes of the British landscape, in fact, are now synonymous with exploration licences that run to 300, each of which has its own number: in and around Somerset, the ones to watch are 225, 226, 227 and 228.

And now there is a new twist. On Thursday, as reports suggested inland shale might hold enough untapped gas to meet the UK’s needs for 25 years, it was confirmed that negotiations between the government and the United Kingdom Onshore Operators Group had resulted in a new “industry charter”. Its key provisions mean that if new gas is discovered, “local communities” could receive financial benefits: £100,000 for every well that is fracked as part of exploration, and 1% of revenues if things prove to be commercially viable. Thus far, this is only envisaged as applying to shale gas. When it comes to coalbed methane, the official line – given to me by an industry insider – runs as follows: “It is true that coalbed methane can be hydraulically fractured, but it has not been done in the UK, and there are no plans to do so. But if there were, coalbed methane would be included in the scheme.”

Fracking, it should be noted, has been widely used on coalbed methane deposits in Australia and the US. So as well as the possible arrival of rigs and tankers, perhaps small villages in the Mendip Hills may yet see a modest financial windfall.

The business economics of unconventional gas are interesting indeed. Prospecting is often done by small, unknown companies, whose apparent aim is to interest bigger firms, and then sell them stakes in full-blown production. UK Methane is a perfect case in point: apparently based on an industrial estate in Bridgend, it has no listed telephone number. When I phone a mobile number for its boss given to me by an anti-fracking activist, a nervous-sounding voice answers, and suggests I send an email to a bog-standard BT Internet address.

I do as I’m told, seeking information about the company’s plans for Compton Martin, Ston Easton, and the nearby town of Keynsham. The reply reads as follows: “Hello John, We are in the middle of a corporate transaction at present so I am unable to comment. Everything is fluid. Once I am in a position to be able to make some firm decisions I will call you. Best regards, Gerwyn.”

What he seems to be referring to is the recent selling of the Australian energy firm Eden Energy’s stake in British gas exploration – which includes its share of the action in the West Country – to a new UK firm called Shale Energy. The price was £10m, £750,000 of which is to be paid in cash, with £6m in Shale Energy shares, and two lots of £1.6m, to be paid when any gas discovered reaches first 500bn cubic feet, and then a trillion cubic feet. Such are the weird economics of unconventional gas, and numbers that tend to dance in front of your eyes.

The town of Keynsham is 13 miles from Compton Martin. In August last year, UK Methane announced that it was about to apply for planning consent to commence test-drilling for gas in another unlikely location: a patch of local land next to a roundabout on the Bristol ring-road. Thus began a saga that seemed to have reached an uneasy pause last December, when the company withdrew its application, claiming that the level of information being requested from it was “far higher than that for any other previous planning application that we have been involved with”. It is now set on applying for what it calls “full production permission”, though when that might happen is unclear.

Watching all this closely is a coalition of local organisations, and a core of activists. One of them is 28-year-old Laura Corfield, who runs an eco-oriented social enterprise called Shift Bristol. I meet her in a cafe on the high street. “People have described UK Methane as a company of two guys in a broom cupboard,” she says. “For a while we were like, ‘Are they playing games? Are they really super-clever?’ But actually, I don’t think there’s anything hidden. At one point, they gave us their mobile telephone numbers. I don’t think they understand the fight they’re getting into with the environmental lobby. And now, they’re not saying anything at all.”

What will happen as and when they apply for full-blown gas production? “If they’ve had that much trouble for just a test bore-hole, the reaction they’d get to that would be monumental. I actually think it would make our job easier if they come back with a bigger proposal.”

Unlike Compton Martin, I suggest, Keynsham looks like the kind of place that might appreciate an injection of funds as part of a future gas deal. And if that was proposed, it might make things more uncertain, mightn’t it? “Yes,” she says. “People are either actually strapped for cash or very fearful of being strapped for cash. I think they might find security in something like that. It’s a bargaining chip, isn’t it? It makes the decision harder for people. I guess we’ll just have to find somebody that can crunch the calculations.”

The third site in which UK Methane seems to be interested is in Ston Easton, a sleepy hamlet close to the old Somerset mining town of Midsomer Norton. There is not much here, apart from the Church of St Mary the Virgin, a luxury hotel currently offering an al fresco ballet show, and a smattering of farms.

One belongs to Jonny and Tom Osborne, 48 and 46 respectively, whose dairy and sheep farm has been in their family for three generations. I meet them midway through the morning, when Tom is seeing to a herd of sheep in a barn that backs on to gently undulating countryside. “Why destroy your environment for the sake of some gas, when you might cause so much damage?” he says. “They should just leave it alone.”

“The ponds here are from a natural spring,” says Jonny, pointing towards a large expanse of water in the middle distance. “In the farm over the way, they sink bore holes, to get water for the animals, direct from the water table. So you can see why we’d be worried about contamination. It’s time we put something back in the land, not destroyed some more.”

I wonder: would they feel any different if their village was offered money?

Tom lets loose a dismissive snort. “But how can you compensate people for what might be lost? That’s just a bribe, isn’t it?”